This is in the format of a deep dive to help guide your discussions with a Contract Manufacturer after you have been matched from our Dedicated Co-packer Search Process. We are able to handle this process for you or we are also available to advise you as you go along this process. Please contact firstname.lastname@example.org or book a time to discuss here if you would like to engage us for further support on your technical review and Co-packer onboarding needs.
Commercialization is the process of making a product commercially viable. This includes finding the correct ingredients to match your formula on a commercial scale and the correct packaging format and making sure everything is compatible with your chosen co-packers manufacturing equipment. If this is your first time making the product on this scale, there are likely changes to both the formula and the ingredients that will need to be made to ensure shelf-life, product quality, and consistent production on the automated machinery.
Once you begin your relationship with your co-packer, here is a general overview of what your onboarding relationship will look like:
- Terms of relationship
- Line Trial Testing
- Pricing and Terms
- First production
Terms of Relationship
Right at the beginning of the relationship, you will discuss with the co-packer on their preferences and how they work with co-packing clients. Some manufacturers prefer to supply all the ingredients themselves, some prefer you to supply all of your ingredients (or a mixture of both). Some co-packers offer warehousing for your finished products, and some will want your product out of their warehouse immediately after production. Everyone is different, and here is where you get all of the information out in the open to see if it still makes sense for both parties to work together. Apart of this is also getting non-binding pricing estimates to make sure that both parties are in the same ballpark before moving forward. That actual final pricing is usually not able to be confirmed until there is a trial production to confirm all of the hypothesis’ being made around the product.
Line Trial Testing
The line trial testing is a very important part of the process that should be used properly to onboard with your manufacturer. This is basically a mini production where the manufacturer is assessing the process steps and how the ingredients react to their machinery and normal way of doing business. They are trying to assess feasibility and trying to understand what the actual tolling pricing will be.
After the line trial, you will have a discussion with the manufacturer to see what adjustments need to be made for the larger production. There will always be hiccups which are completely normal, so do not panic if these go wrong at the line trial. That is the point of us testing the production before going to larger volumes and getting an understanding for production yields to confirm the pricing.
After you have the line trial, the co-packer will have a better understanding of how much time and how many staff it will take to make your product. He should now be able to give you a tolling price that you can input into your product cost of goods.
This is your first big production! You will want to be there at the production and oversee everything that happens. Pay attention to everything you possibly can. Who is the shift manager? What type of equipment are they using? How quickly is your product being manufactured? You should be like a hawk, keeping an eye on everything possible.
For your first production, you are completely in line to ask to have the product pulled every 30-60 minutes to make sure it is still in accordance with your product specifications. Similarly, it is not a bad idea to pull product from the production line at the beginning, middle, and end of the production so you can send it out for your own food safety testing.
Write down everything you encounter, both good and bad, from your first production so you can compile it into a post-production report. You can share this report with your team and with the co-packer to see where you can optimize the production for better tasting or lower costs.
Before you lock in your first production, make sure you have done these three important tasks:
- You have submitted your product specifications and they have been confirmed by the co-packer. In the event of a dispute of confirming a product, the dispute will come down to whether or not a product spec was followed, so this is incredibly important.
- You have reached out to all of your suppliers to ensure that all the items are in stock and have adequate packaging. You want to ensure that you will be able to deliver all components well in advance for the production. Add a week to all of those lead times if you’ve never done business with that supplier to account for new customer onboarding and/or art proofs.
- Be Ready! Before you choose a production date with your co-packer, you should make sure that you are ready. That you feel good about all the suppliers. Do not be so intoxicated with the pressure of mounting lead times that you rush into a production without being prepared.
Expectations when going through this Process
This will be a difficult, slow, and frustrating process. We have to remember, In order to find and work with a co-packer successfully, you need to get the normal customer/client relationship out of your head. You must completely change your mentality and instead think of your co-packer like an investor, especially in the search phase.
Co-packers make most of their money from brands when a product line has scaled. In most cases, the co-packer will either break-even or lose money while working through the onboarding and initial orders with your brand. However, they will make money once you scale to truckload purchase orders, which is why they need to make a decision to invest their line time and resources to your product line and whether or not your brand will be the one that succeeds on shelf compared to other competitors in your category (that have probably also called the same co-packer).
Like any investor, you must collect all of the credibility indicators about your brand and sell yourself to the manufacturing group. Explain your long-term vision, the team members that you have in place, and sales strategy. In everything you do, you are courting the co-packer like an investor. If an investment group didn’t answer your initial emails or phone calls, you wouldn’t say you are done with that group because of their bad customer service. You would likely keep on calling them and try to find other ways to get in contact with them through referrals, networking groups, or consultants. It is a very similar process to finding a contract manufacturer to make your food product.